Stocks Sink As Lockdowns Loom
Updated
Hey guys, so I took a few days off because my wife and I moved. I hope everyone had a great weekend, and an even better thanksgiving! Let's get right into today's analysis. Global markets are mixed this morning, with US Futures trading slightly off yesterday's high's. Although we're seeing heightened optimism off the back of successful vaccine trial results from Moderna, and Pfizer's BioNTech, the interim rally lost steam amid growing concerns over a second wave of lockdowns. California, and New Jersey, among others, imposed new restrictions, and this is being rolled out pre-winter. Imo it's only going to get worse, and could be the scapegoat, yet again, to explain why the market crashes/corrects.
Updates:
- Gold is up marginally and sitting around 1889.
- Yields were slightly off their high's with the 10Y sitting at .89.
- Retail sales came in weaker than expected with 0.3% growth vs 0.5% exp. (prior 1.6%).
- Industrial production came in at 1.1% vs expectations of 0.9%.
- Capacity utilization came in at 72.8% vs 72.3% exp (prior 72%).
- The Dollar (DXY) continues to get hammered, and is now sitting at 92.35, after a recent, but albeit brief, surge to 94.30.
- The Vix is seeing some strength today and is trading off the recent low's. We're testing the 50 period MA on the hourly (23.80), but we have a long way to go to recapture the 100 day MA at 26.80. How much more of a beating can the Vix possibly take in the name of fundamentally suppressing price discovery? Well, I read recently that retail investors (dumb money), have out earned Hedge Funds (smart money), 10 to 1 this year. I think that sums up the current state of the market.
- Bitcoin rose above 17,000 as the dollar debasement parade continues.
SPY Analysis:
- The Bulls successfully broke us above both the ascending channel resistance (a key trendline formed from the March crash, now sitting around 359), and the multi-year, megaphone resistance line at 358. I can't stress how close we are to a major move here, given the importance of these trendlines, alongside current stock valuations, and economic weakness. You guys need to decide if you think this massive move is going to be to the upside, or to the downside. You know where I stand on this.
- If the bulls are able to hold on to the megaphone line on the weekly, it would mark the first weekly close above this trendline since we broke below in July 2011, over 9 years ago. I think it goes without saying that if there are any bears left, they'll be showing up this week to defend these long-term resistance levels. Major supports to watch below the megaphone resistance are 350 (the top of the triangle), the 21 day EMA (347.42), and the 50 day MA at 340.
- The daily RSI is now sitting at 67, and the hourly is at 68, showing we're approaching overbought levels over multiple timeframes. (Weekly RSI is at 60).
Thanks for your time today guys, and good luck out there! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Updates:
- Gold is up marginally and sitting around 1889.
- Yields were slightly off their high's with the 10Y sitting at .89.
- Retail sales came in weaker than expected with 0.3% growth vs 0.5% exp. (prior 1.6%).
- Industrial production came in at 1.1% vs expectations of 0.9%.
- Capacity utilization came in at 72.8% vs 72.3% exp (prior 72%).
- The Dollar (DXY) continues to get hammered, and is now sitting at 92.35, after a recent, but albeit brief, surge to 94.30.
- The Vix is seeing some strength today and is trading off the recent low's. We're testing the 50 period MA on the hourly (23.80), but we have a long way to go to recapture the 100 day MA at 26.80. How much more of a beating can the Vix possibly take in the name of fundamentally suppressing price discovery? Well, I read recently that retail investors (dumb money), have out earned Hedge Funds (smart money), 10 to 1 this year. I think that sums up the current state of the market.
- Bitcoin rose above 17,000 as the dollar debasement parade continues.
SPY Analysis:
- The Bulls successfully broke us above both the ascending channel resistance (a key trendline formed from the March crash, now sitting around 359), and the multi-year, megaphone resistance line at 358. I can't stress how close we are to a major move here, given the importance of these trendlines, alongside current stock valuations, and economic weakness. You guys need to decide if you think this massive move is going to be to the upside, or to the downside. You know where I stand on this.
- If the bulls are able to hold on to the megaphone line on the weekly, it would mark the first weekly close above this trendline since we broke below in July 2011, over 9 years ago. I think it goes without saying that if there are any bears left, they'll be showing up this week to defend these long-term resistance levels. Major supports to watch below the megaphone resistance are 350 (the top of the triangle), the 21 day EMA (347.42), and the 50 day MA at 340.
- The daily RSI is now sitting at 67, and the hourly is at 68, showing we're approaching overbought levels over multiple timeframes. (Weekly RSI is at 60).
Thanks for your time today guys, and good luck out there! If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Note
Dorsey and Zuckerberg have been invited back into meet with the Senate Judiciary Committee today. I wonder if they'll ask Dorsey important questions like: What's your favorite yoga position?Note
Vix catching a solid bid at the open, spiking to just below it's 100 period MA on the hourly (24.2). Not too shabby...Note
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21 period EMA on the hourly (358.39) is acting as interim support for the moment...Note
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Now seeing headlines that French restaurants and bars are expected to remain closed until mid-January. Mean while, the CAC40 is down just 0.10%, and is about to go green on the day. Welcome to Mars...Note
It's been a seemingly linear buying frenzy since 10AM, buy the dippers out in full-force. Only 1 candle on the 5 minute has closed red since 10. We're now approaching the gap fill at 361.21. Let's see if the bulls have enough gas in the tank...Note
Vix is receiving it's daily beating right on schedule, and we're now back to a 22 handle. The lowest daily close since the March crash was 21.40 on August 17th, so we're knocking on the door. I'm quite surprised we're not seeing more upward pressure on volatility, given the fact that the term structure is notably elevated into December/January. Vix is looking incredibly cheap right now, so where is smart money hiding? Where are the commercial hedgers?Maybe they're in a dark corner somewhere with their tail between their legs, because retail investors have been outperforming them 10 to 1 this year. They've also outperformed my portfolio, but I'm not going anywhere. I still short Nasdaq, and I'm still long Vix...
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SPY just about filled the overnight gap, new HOD now at 361.17. Nasdaq appears to be pulling the majors lower, though. Looks like Dorsey and Zuckerberg's meeting with the Senate Judiciary committee isn't going very well...Note
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Massive short squeeze here as the afternoon session kicks-off. No clear catalyst as yet, barring the gap being filled at 361.21...Note
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Frankenstein price action on the majors today. Reminds me of the good ole' QE infinity days, when markets would melt-up everyday like a one way highway. Back then, traders were all trying to figure out how the FED could ever unwind the 4 Trillion dollars plus they put on their balance sheet after the 2008 crash. Now after the march liquidity binge by basically 50 of the top central banks across the globe, it's essentially impossible for the FED to unwind their balance sheet as there are no more buyers in the market other than central banks themselves, and mega cap companies relentlessly buying their own stock so as to avoid paying taxes on bringing in their offshore cash piles. Interest rates are doing next to nothing for stimulating demand, so now COVID-19's job is to cut supply. Both demand and supply are being manipulated just to keep up the appearance of a functioning economy. As I mentioned earlier, welcome to Mars...Note
Now seeing that Ohio has imposed a 21 day curfew from 10PM. Maryland has announced a restaurant curfew, and is expected to impose a general curfew, also. Mean while, markets keep melting up, and after selling off about 1% overnight, both the S&P and the DOW are about to join the Nasdaq and Small Caps in the green. CAC40 (France) is now up half a percent. Let's see if there are any bears out there who have something to say come power hour...Note
Jay Powell, FED Chair, while speaking earlier at the Bay Area Council Business Hall of Fame Awards Ceremony, said, "The near-term risk that we’re most focused on is the spread of COVID these days." But, as COVID seemingly runs rampant, and states and nations begin to re-impose lockdowns for the winter, markets are roaring to all-time high's. I wonder how this ends...Note
SPY losing steam here and looks like it wants to break below the 50 period MA on the 5 minute...Note
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Volume is increasing notably as we lose traction. This could be an indicator of further downside into the close...Note
The 21 period EMA on the hourly is now at 359.47. If we lose this MA, which is sitting just on top of the ascending channel, the bears might make a run for the 50 period MA on the hourly (357.09). This MA is sitting essentially at the megaphone trendline. Let's see what happens next...Note
Vix is catching a bid here off the day's low's, and is now back at a 23 handle...Note
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Very orderly sell-off at the moment, stairs down. Almost as if someone is controlling price action...Note
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Almost kissed the 21 period EMA on the hourly (359.54). There's a serious battle going on under the surface here. Miracle bid keep showing up to keep us elevated. Buy the dippers or PPT? 5 minutes to the close...Note
That's all folks! The Bulls were able to keep us above all major supports, but we saw some weakness overnight and at the open, and again heading into the close. Tomorrow should be another interesting day, and as we approach the weekend, price action is going to get more volatile imo. We're on the verge of breaking a 9 year weekly trendline, so tune back in for more live updates tomorrow. Have a great night guys, and thanks for your time today. Cheers, Michael.
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